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Trade Magazin Article: Back to Europe – Strategically Relocating Electronics Manufacturing Orders

TCO Analysis, Split-Shoring, and Regulatory Dynamics for European OEMs

This published article from the trade magazine EPP (Issue 04/2026, Author: Dirk Kaussen, MBA) examines the strategic relocation of electronics manufacturing orders. The article highlights why unit price alone is a flawed decision criterion and demonstrates how OEMs can build resilient supply chains through Total Cost of Ownership (TCO) evaluation, establishing European second sources, and adapting to regulations such as NIS-2 and CSDDD.

First Published: EPP (04/2026) | Author: Dirk Kaussen, EMS Strategy Group

1. TCO Evaluation: Unit Price Is Only the Tip of the Iceberg

• Pure unit price comparisons neglect critical cost factors along the entire value chain.
• TCO Cost Drivers: Transport volatility, capital tied up in safety stock, advance financing, audits, and delayed response times severely impact total cost calculations.
• Margin Advantage: According to Bain & Company, companies that strategically implement nearshoring can increase their gross margins by up to 30 percent.

2. Risk Mitigation Through Split-Shoring

• Recent global crises underscored the severe risks of extreme reliance on single offshore regions.
• A complete reshoring is not always mandatory—selectively manufacturing critical assemblies in Europe establishes a reliable second source (split-shoring).
• EMS providers in Central and Eastern Europe (e.g., Poland, Romania, Bulgaria) offer short transport routes, modern production technologies, and high flexibility.

3. Regulation, IP Protection, and Auditability

• Regulatory Pressure: Frameworks such as CSDDD, NIS-2, and the EU Chips Act 2.0 require end-to-end transparency and auditability, which are structurally easier to execute with European EMS partners.
• Know-How & IP Protection: Every order involves transferring sensitive engineering know-how; additionally, industry bodies like ZVEI warn of hardware Trojan tampering risks in purely non-European setups.
• Structured Selection: Process mastery, financial stability, and obsolescence management carry significantly more weight in partner selection than machine fleet size alone.

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